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US Oil & Gas Rig Tally Increases, Permian Witnesses Rebound

Zacks Equity Research
·4 min read

In its weekly release, Baker Hughes Company BKR reported an increase in U.S. rig count.

More on the Rig Count

Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers to gauge the overall business environment of the oil and gas industry.

A change in the Houston-based oilfield service player’s rotary rig count affects the demand for energy services like drilling, completion and production, provided by the likes of Halliburton Company HAL, Schlumberger Limited SLB and Transocean Ltd. RIG.

Details

Total U.S. Rig Count Increases: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 261 for the week through Sep 25 versus the prior-week count of 255. Thus, in the past six weeks, the tally has increased four times. The current national rig count is, however, below the year-ago level of 860.

The number of onshore rigs for the week ended Sep 25 totaled 246, higher than the prior-week count of 240. One rig was operating in the inland waters, same as the prior-week tally. Also, in the offshore resources, 14 rigs were in operation, in line with the prior-week count.

United States Adds 4 Oil Rigs: Oil rig count was 183 for the week through Sep 25 compared with 179 for the week ended Sep 18. This represents a rebound in the numbers. Investors should note that the current tally of oil rigs, which is far from the peak of 1,609 attained in October 2014, is also below the year-ago figure of 713.

U.S. Natural Gas Rig Count Rises: The natural gas rig count of 75 was higher than the prior-week level of 73. However, the count of rigs exploring the commodity is lower than the prior-year week’s 146. Importantly, per the latest report, the number of natural gas-directed rigs is 95.3% below the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 16 units, lower than the prior-week count of 17. However, the horizontal/directional rig count (encompassing new drilling technology with the ability to drill and extract gas from dense rock formations, also known as shale formations) of 245 was higher than the prior-week level of 238.

Gulf of Mexico (GoM) Rig Count: The GoM rig count was 14 units, of which all were oil-directed. This was in line with the prior-week count.

Rig Count in Prolific Basins

Permian — the most prolific basin in the United States — saw its weekly oil rig tally of 125, higher than the prior-week count of 123. In the Eagle Ford, the number of rigs rose to 12 from 9 in the prior week. Also, the Utica shale witnessed an addition of one rig in the week. Moreover, the Marcellus basin saw the addition of one gas rig in the week through Sep 25.

Canada Rig Count

The count of rigs engaged in the exploration and production of oil and natural gas in Canada was 71 for the week through Sep 25, higher than the prior-week count of 64. However, the count was down from the year-ago figure of 127 rigs.

Oil rig count was 33 for the week through Sep 25 compared with 30 for the week ended Sep 18. Moreover, gas rig count rose by four to 38 units through the week ended Sep 25.

Outlook

With oil prices recovering rapidly, the West Texas Intermediate crude has rallied more than 212.8% since late April. With reopening economies, most analysts opine that drillers will continue to add rigs. Rising number of rigs will in turn boost demand for energy services like drilling, completion and production.

Meanwhile, investors may keep an eye on two energy stocks that are expected to benefit if the oil price rally sustains, namely Concho Resources Inc. CXO and Pioneer Natural Resources Company PXD. Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Transocean Ltd. (RIG) : Free Stock Analysis Report
 
Schlumberger Limited (SLB) : Free Stock Analysis Report
 
Halliburton Company (HAL) : Free Stock Analysis Report
 
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
 
Concho Resources Inc. (CXO) : Free Stock Analysis Report
 
Baker Hughes Company (BKR) : Free Stock Analysis Report
 
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